What should he do? Join Facebook or compete like crazy or reboot his company to do another product. Throwing out software, is not necessarily bad, sometimes a rethink and a rewrite generates a better product. It's the team that counts. So rebooting the company, while painful may not be the worst outcome.
Having been a third party relations software manager many years ago, it might be instructive to see what others have done in a similar situation.
Accounting Software - Intuit and Microsoft
When Intuit was moving into small business accounting on Microsoft's Windows platform, Microsoft responded with Microsoft Money. Intuit fought back hard. Intuit had focused marketing, industry analysts were quick to compare the solutions. Microsoft tried to grow its business with acquisitions:
- Great Plains accounting software at the end of 2http://en.wikipedia.org/wiki/Claris000
- Navision European accounting software in 2002
- Encore non-profit accounting products in 2004
Because Microsoft entered the market, there was plenty of press for independent software vendors and those that capitalized on it could succeed. So Intuit gained by promoting heavily, focusing sharply and expanding into payroll and tax. By comparing itself with Microsoft, Intuit was seen as playing in the big league.
Mac Software - Claris, Apple and Adobe
Software vendors are often fearful of hardware vendors. When the Apple Macintosh came out, it had some software like MacPaint, MacProject, MacWrite and MacDraw. It had a "Let a Thousand Flowers Bloom" software policy. The app that made Mac sales soar was an independently developed publishing package, PageMaker. Apple started to get heat from developers about its apps strategy. Sensing conflict, the company set up a software subsidiary, Claris, to market apps like MacPaint. Claris purchased FileMaker. Some products, like AppleWorks for the Macintosh went back to Apple. Claris eventually rebranded itself as FileMaker.
Claris never really realized its potential. One player in the thriving Mac ecosystem was Adobe who started with a language, Postscript, to drive printers. Adobe ended up doing a very small, but important part of the platform. It went on to create Photoshop that was so much better than MacPaint. Eventually it acquired PageMaker and had a much better outcome than Claris. So don't bet on the big platform guy to get the apps right.
Enterprise Databases - Oracle, IBM and SAP
Database vendors have had particularly rocky histories with platform vendors. On the one hand they fear that system vendors will compete with them. On the other hand application software vendors that use their platform fear the database company coming after them.
IBM was king of the large databases in the 1980s. Then IBM's Ted Codd and Chris Date came up with the relational database model. It's worth reading about UC Berkeley's work on the Ingres relational database by Michael Stonebraker. Relational database companies like Oracle, Informix and Ingres danced around IBM, offering their solutions on multiple platforms, mainly variations of UNIX. Oracle, the winner, used IBM's SQL language and marketed very aggressively, long before the code was ready in many cases. Oracle had by far the biggest vision - run on everything from mainframes to PCs. They never had big success at the low end, but they conquered the enterprise. Billboards on 101 featured Oracle and Informix's rivalry. Eventually part of Informix was sold to IBM.
Database vendors are squeezed between systems vendors and application vendors. SAP competes with Oracle in the applications space. SAP's TomorrowNow subsidiary stole Oracle software and customer support documents. Originally Oracle won a $1.3B verdict that was thrown out and Oracle was given the choice of accepting $272M or continuing the battle. The court case continues.
So What About Twitter and Facebook?
Are Twitter and Facebook reliable platforms? It depends on the software product, which parts of Twitter and Facebook you need and what you are prepared to let them know about your service. So Dalton Caldwell who plans to offer a competing social platform App.net that is ad free and relies on paid subscriptions can do what Intuit did. Make the most of the PR around Facebook, get some good lawyers to avoid patent disputes and prove that consumers are prepared to pay.
App.net plans to raise $500K on Kickstarter. With 11 days to go they need to raise $360,000. So far they have over 1800 backers. Another model is the public broadcasting model, where grants and pledges fund the community. The Facebook platform provides a quick start for App.net, but I suspect that long term it will need to rewrite code to create strategic advantage. Go Dalton!
